Income Tax officials search Huawei’s premises

The Income-Tax Department is carrying out searches on premises linked to Huawei in Delhi, Gurugram and Bengaluru.

According to an agency official, based on the preliminary findings, simultaneous searches were initiated in the three cities on Tuesday.

In a statement, Huawei said: “We have been informed of the visit of Income Tax team to our office and also of their meeting with some personnel. Huawei is confident our operations in India are firmly compliant to all laws and regulations. We will approach related government departments for more information and fully cooperate as per the rules and regulations and follow the right procedure.”

Last December, the department had searched the premises of several entities linked to the manufacture of Chinese mobile phones on suspicion of tax evasion. Multiple locations related to Oppo and Xiaomi were also covered.

The agency later said that it had detected multiple irregularities on the part of two companies manufacturing Chinese mobile phones.

“The search action has revealed that two major companies have made remittance in the nature of royalty, to and on behalf of its group companies located abroad, which aggregates to more than ₹5,500 crore. The claim of such expenses does not seem to be appropriate in the light of the facts and evidence gathered,” said the agency.

Stating that both companies had not complied with the regulatory mandate of disclosing transactions with associated enterprises, the agency had said that such a lapse made them liable for penal action under the Income-Tax Act, the quantum of which could be in the range of over ₹1,000 crore.

“Evidence with regard to the inflation of expenses, payments on behalf of the associated enterprises, etc., had also been noticed, which led to the reduction of taxable profits of the Indian mobile handset manufacturing company. Such amount could be in excess of ₹1,400 crore,” said the agency.